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The Cargo Letter
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THE CARGO LETTER [383]
Air & Ocean Logistics - Customs Broker News
30 November 2002
Good Monday Evening from our Observation Deck...... overlooking the officially designated "Cargo City" area and....... Runway 25-Right, at Los Angeles International Airport, voted "Best Cargo Airport in North America." We are a day late this month -- blame the American Thanksgiving turkey! Happy Holidays!
Here is your Executive Summary for events of November 2002.
Contribute your knowledge, stories & company information ........ by
e-mail to The Cargo Letter. We strive to
bring you useful information which is timely & topical. Be sure to visit our
web site:
To post comments or discuss articles, go to ....... http://www.interpool.com/tcl/disc1_frm.htm
Michael S. McDaniel, Editor & Publisher, Countryman & McDaniel,
forwarder/broker attorneys at LAX.
INDEX to The Cargo Letter:
Section A: Section: Trade, Financial & Inland News|
Section B: FF World Air News |
Section C: FF World Ocean News | Section
D: FF in Cyberspace |
Section E: The Forwarder/Broker World
Freight Forwarder Trade Briefs
The Cargo Letter Financial Page
- Biggest U.S. Government Change In 50 Years ........
as Congress has passed & President Bush has signed the Homeland Security Act of 2002 (H.R. 5005). This measure creates a 170,000 member department consisting of 22 agencies in the largest federal government reorganization since the Dept. of Defense was created in 1947. The U.S. Coast Guard, Customs Service, Secret Service, Transportation Security Admin., Animal & Plant Health Inspection Service, Border Patrol, portions of the Immigration & Naturalization Service, and various other agencies will be combined under one head. The changes will officially occur on or about 1 Jan. 2003. U.S. Customs Service Commissioner Robert C. Bonner said his agency will move intact to the new Homeland Security Dept.
- Insuring Terror ........
as President Bush has signed the Terrorism Risk Insurance Act (H.R. 3210). This measure provides that the federal government will provide compensation of up to US$90Bn in damages from covered terrorist acts (above the deductible level). On the maritime side, this may include terrorist acts in U.S. waters & terrorist acts either against U.S. flag vessels or against foreign vessels that routinely operate out of U.S. ports (such as certain cruise ships). In exchange, insurance companies must provide a certain level of terrorist insurance coverage & must contribute to a terrorism insurance pool.
- GOP Transport Priorities ........
as Sen. John McCain, R-Ariz., chairman of the Senate Committee on Commerce, Science & Transportation in the newly Republican-controlled Senate, has placed maritime, aviation & land transport issues on his list of legislative priorities for 2003. McCain said the committee would continue to oversee the security of the country's transportation system, including the ongoing implementation of the Aviation & Transportation Security Act and the Port & Maritime Security Act. The committee will hold a series of hearings to reauthorize the safety programs under the Transportation Equity Act for the 21st Century, including the National Highway Traffic Safety Administration & the Federal Motor Carrier Safety Administration. The Senate Commerce Committee will also consider legislation to reauthorize the Haz Mat Transportation Program & the Rail Safety Act, and other federal transportation programs.
- New Electronic Document Authority ........
as the Int'l Chamber of Commerce has published a new guide to the "electronic supplement" to its rules on documentary credits. The guide explains how the electronic supplement, known as "eUCP," should be used in day-to-day practice. The eUCP came into force on March 31, 2002. It was a response by the Int'l Chamber of Commerce to the growing number of electronic documents being used in Int'l trade. The guide deals with basic issues faced by users of electronic documents. "The product of more than 2 years of work, the eUCP is expected to revolutionize the way letters of credit are commonly used," the Paris-based Int'l organization said.
www.iccwbo.org/home/news_archives/2002/stories/eucp-nov.asp
- Zero Tariff Questioned ........
as U.S. Trade Representative Robert Zoellick on 26 Nov. unveiled a U.S. proposal to eliminate tariffs on most all consumer & industrial products in all WTO members by 2015. While the proposal was greeted enthusiastically by most U.S. manufacturers, it met with strong resistance from the U.S. textiles & apparel industry. Criticism was also heard from the EU & the head of the WTO.
- China Spring Roll ........
as its total foreign trade volume in Oct. rose 32.3% compared with the same month a year ago to US$55.15Bn. Exports last month increased 31.5% versus the comparable period in 2001 to US$29.95Bn, mainland customs figures revealed, while imports grew 33% to $25.2Bn in Oct.
- Softening The Lumber Dispute ........
as a group of leading former U.S. politicians have created the "U.S.-Canada Partnership for Growth" with the intent of resolving the continuing trade dispute over softwood. The U.S. has imposed a 27% tax on Canadian softwood lumber imports. According to statement by the partnership, "this tax is damaging the historically close relationship between the nations & causes economic harm on both sides of the border." The partnership has begun an advertising & grassroots campaign to "resolve issues surrounding the import tax." Call (202) 530-4628.
- Speedy Crossings ........
as the U.S. & Canada Customs are expected to implement a new program to allow trucked cargo to cross the border fast & secure manner. The program, "Free & Secure Trade" or FAST, is based on principles from U.S. Customs-Trade Partnership Against Terrorism & Canadian Partners in Protection. Under the program, importers will submit applications to both U.S. & Canada customs. Trucking companies may apply to one or both governments to participate. Participating truck drivers must be fingerprinted & receive a FAST photo identification card. The U.S./Canadian border crossings to be used for the program include: Blaine, Wash.; Detroit & Port Huron, Mich.; and Buffalo, Lewiston & Champlain, NY. The program essentially provides a "green light" to participants crossing these land-border ports.
- Mexican Crossings ........
as American truckers are worried about losing their jobs to Mexicans under Washington's new motor freight policy while companies in Mexico are just as concerned about where they'll find the money to upgrade aging fleets to pass tougher U.S. border inspections. President Bush on Nov. 27 approved opening U.S. highways to Mexican trucks beyond the 20-mile commercial border zones where Mexican rigs now transfer their cargo onto U.S. rigs heading to the American interior The decision comes nearly a year after Bush promised to do so in compliance with a provision of the North American Free Trade Agreement. In a statement the Mexican government welcomed Bush's decision, but criticized the new regulations. Mexico argued that Canadian truckers don't face the same requirements. NAFTA gave Mexican trucks access to U.S. roadways in 2000, but the Clinton administration limited their access to within a 20-mile commercial zone because of safety concerns & pressure from the Teamsters Union.
Mexican transporters have been angry that the U.S. "violated" the treaty, even though enthusiasm for the venture has been cool. So far, only 130 trucking companies -- of the thousands operating in Mexico -- have applied for permits.
- Con-Way Transportation Will Charge For Security ........
as the US$2Bn provider of freight delivery & logistics services, said its four less-than-truckload (LTL) operating units will follow the trend & apply a homeland security surcharge on all shipments, northbound & southbound, crossing the U.S-Canadian border -- effective Jan. 2, will be US$8 per shipment.
- Expect A $$ Trend Here ........
as current & former employees of C.H. Robinson Worldwide Inc. have filed a US$100M lawsuit in federal court accusing the transportation freight giant of failing to pay overtime wages. The plaintiffs allege that nearly all of the Eden Prairie, Minn.-based company's sales force was mischaracterized as exempt to deprive them of overtime wages for working more than 40 hours a week. The company strongly denied the accusations. Watch out for trial lawyers lingering near your door.
- Goodbye (part of) Danzas ........
as the logistics subsidiary of Deutsche Post World Net, will conduct its activities under the DHL brand name as of April 1, 2003, with the business units Danzas Eurocargo (European land transport) & Danzas Solutions (supply chain management solutions) being integrated into DHL. Danzas AEI Intercontinental (air & ocean freight) will continue to operate from Basel under the name DHL Danzas Air & Ocean. The firm said Danzas is to remain a legally separate company. For now.
- More Hellos To DHL ........
as DHL Canada is purchasing Mayne Group Canada, Inc., a leading Canadian express delivery company, & is thus set to become the 3rd largest express delivery provider in Canada. The purchase will be final by Jan. 31, 2003, pending approvals by Canadian authorities.
- Giving Exel The Bird ........
as it will acquire Eagle Freight (Pty) Ltd, one of the largest privately owned freight companies in South Africa -- with a leading position in seafreight, as well as a strong airfreight business. Consideration will be settled from existing cash resources & net assets related to the transaction are expected to be US$6.635M -- subject to approval from the Competition Commission.
- Schenker Partners In China ........
as it has set up a logistics joint venture with Beijing Int'l Cooperation Center. Schenker BITCC Logistics (Beijing) Co. Ltd. will have US$5.7M in capital, of which Schenker will hold a share of 70% & BITCC the remaining 30%. The joint venture will receive an "A" license (need a Chinese partner for this), which will allow it to handle Int'l freight traffic. The joint venture is expected to start 2003. Schenker has also just opened a new 20,000 sq. meter facility at Athens, Greece -- posturing for the 2004 Summer Olympics.
- Frail Rail? ........
as Canadian National, Canada's largest railroad is cutting 1,146 jobs & taking charges totaling US$252M against 4th-quarter earnings. CN will take an after-tax charge of US$110.0M for claims -- about two-thirds of the charge is for asbestos-related claims. Combined, the 2 after-tax charges will impact CN’s 4th-quarter results by about US$160.2M. On the other hand, CN said it is prepared to invest more than US$30M in ONRail’s assets & employees, following its proposed acquisition of the NE Ontario railroad.
- Don't Ship A Package Without It? ........
as UPS is extending its small business solutions with launch of the UPS Capital VisaBusiness card. The card, issued by Bank One, rewards shippers with credits toward UPS shipping services & provides small business owners with online tools to manage expenses, effectively giving them the ability to monitor and control individual employees' expenditures. Cardmembers earn coupons for UPS services. Next ..... the Hanjin card?
- Nu Cargo U ........
as an agreement has been signed between the Kuehne Foundation, based in Switzerland, & the University of St. Gallen to establish a "Kuehne Institute for Logistics at the University of St. Gallen." The aim of this institute is to support training & further education as well as research in the fields of transport & logistics and is the 1st such facility at a Swiss university. The institute is to receive an initial annual grant of 2 million Swiss Francs & will employ up to 15 staff. It is planned that there will be cooperation with leading universities in Europe & overseas as well as exchange of visiting professors.
- Paying For No Poison? ........
as the largest global producer of methanol, Methanex Corp., based in Vancouver, Canada is seeking US$1Bn in damages in a new pleading it has filed with a NAFTA tribunal claiming harm caused by California's 1999 decision to ban a gasoline additive methyl tertiary butyl ether (MTBE), which the company produces. There is suspicion that the additive has carcinogenic properties, but does contaminate ground water.
- China Forwarder Risk Review ........
as an ad hoc group, each on individual business, met informally this month in Hong Kong & the China mainland to review insurance & risk trends in the regional freight forwarder market. The group included:
- Ben Llaneta, Jr., XL Specialty Ins. Co., Chicago
- Byron E. Countryman, Countryman & McDaniel, Los Angeles
- Michael S. McDaniel, Countryman & McDaniel & The Cargo Letter, Los Angeles
- Bie Yao, Risk Management Insurance Brokerage Ltd, Hong Kong
- Danny Yao, Risk Management Insurance Brokerage Ltd., Hong Kong
- Matthew Zehner, Roanoke Trade Services, Ins., Chicago
- U.S. Customs Reminds Brokers ........
as you have only until Jan. 21 to pay the annual permit fee -- whether individual, partnership, or corporation. Contact Scott Nielsen, U.S. Customs' Broker Management, at (202) 927-0380.
- The Winona Container System ........
as a man has been charged with theft of containers with more than US$3M worth of goods from Sydney port. Police said detectives from Operation Netivas, charged the suspect with armed robbery & detaining for advantage over a truck hijacking involving the theft of US$2M in mobile telephone equipment on Nov. 18 last year. The man was also charged over the theft of US$24,000 worth of refrigerators on Nov.16 last year & theft of US$1.2M in DVD players at Botany on Oct. 23 last year.
- Sent To Nest ........
as a California woman was sentenced to 6 months in prison for smuggling nearly 2,900 sea turtle eggs into the U.S. Maria Dolores Flores, 38, purchased the eggs in her native El Salvador in March 2000. Federal inspectors discovered them wrapped in foil & hidden in luggage coming through Houston's Bush Intercontinental Airport en route to L.A. Flores was indicted in Aug. 2001 on federal charges of smuggling sea-turtle eggs without a permit. The eggs are protected under the Endangered Species Act. Flores' sister, Ena Lillibet Reyes, was sentenced to 5 months in prison last year for smuggling turtle eggs. Turtle eggs are a delicacy in some cultures and can fetch US$5 each on the black market.
- Officer Krowbar Retires ........
as the best drug dog ever to work at the world's busiest border crossing has been praised by U.S. Customs. Mexico's most-feared drug cartel put a price on his head. Over the years, his keen senses routinely frustrated smugglers by sniffing out 33 tons of drugs valued at more than US$306M. About 2 years ago, investigators heard through informants that the Arellano-Felix cartel, the powerful Tijuana-based drug smuggling gang, had put a US$50,000 price on Krowbar's head. Krobar is an 85-pound Belgian Malinois, a breed that resembles German Shepherds.
- But Officer Rocky Just Glad To See You ........
as the police dog was just being friendly when he nuzzled the crotch of a drug sumuggler & did not breach the man's rights, an Australian court has ruled. The 22-year-old suspect was found to be carrying amphetamines & cannabis but the man's lawyers had argued that Rocky's crotch nuzzle amounted to assault.
- Allianz (German insurance giant)
DOWN with its worst ever result in 3rd quarter with a net loss of US$2.49M -- due to high flood claims, asbestos reserves in the U.S., writedowns on shares, & losses from its banking subsidiary Dresdner Bank.
- British Airways.
UP with pretax profit of GBP245 million (US$387M) , compared to GBP5 million in 2001, for Q3 ended Sept 30.
- China Airlines Ltd.
UP as revenue grew 11% on year in Oct. to NT$6.49 billion (US$1=NT$34.75). The carrier's Jan. to Oct. revenue totaled NT$60.54 billion, up 4% from NT$58.18 billion in the same period a year ago.
- Crowley Maritime.
UP with net income of US$16.1M for 3rd quarter, up from US$12.2M in the same 2001.
- EGL Eagle Global Logistics.
UP with 3rd-quarter net income of US$5.7M, compared to a loss of US$8.8M in Q3 of 2001.
- Emirates Airline
UP as half-yearly profits rose 140% US$110M.
- Expeditors Int'l of Washington Inc.
UP with Q3 net earnings of US$30.6M, up 12% from year-earlier.
- Interpool Corp.
DOWN as income from operations after certain adjustments for 3rd quarter of 2002 was US$8.2M, or $0.28 per diluted share, compared to US$11.6M, or $0.40 per diluted share in 3rd quarter of 2001. Net Income for 3rd quarter of 2002 was US$3.5M, compared to US$9.5M in 3rd quarter of 2001. Interpool's container operating lease fleet at the end of 3rd quarter, excluding CAI, grew approximately 16% on an annual basis to 482,000 TEUs (20-foot-equivalent units), up from 414,000 TEUs at the end of 3rd quarter of 2001 and up from 449,000 TEUs at end of the previous quarter. The chassis operating lease fleet at Sept. 30, 2002 was 189,000, up 12% from 169,000 at Sept. 30, 2001. Utilization of the container fleet for 3rd quarter of 2002 was 98%, up from 95% in same period a year ago. Interpool will pay a cash dividend of US$.0625 cents per share for 4th quarter of 2002, in Jan. 2003, the 3rd increase in 18 months.
- Malaysia Airline System Berhad (MAS).
Up as profit before tax was RM5.0 million (US$1.317M) for the 2nd quarter ending Sept. 30. This compared to a pretax loss of RM237.0 million for the corresponding quarter last year & a pretax loss of RM77.6 million for the 1st quarter ending June 30. This is 1st profit in 5 years.
- Mitsui O.S.K. Lines Ltd.
DOWN with a 60.5% drop in 1st-half net income to US$45M.
- Nippon Express Co, (Japan's largest general transport company)
UP as 1st half group net profit rose 30%, helped by a reduction in fixed costs & a pick up in air cargo.
- P&O Nedlloyd Container Line Ltd.
DOWN with a US$46M operating loss for Q3 (before restructuring costs of US$5M) -- same as last quarter (before restructuring costs of US$15M) despite fuel prices being US$15M worse.
- Schenker.
DOWN with a 24% decrease in earnings before interest & tax in Q3 to US$26M. Down for the 1st 9 months of 2002 as operating profit fell by 8.8% compared to last year.
- Swiss Int'l Air Lines.
DOWN US$92.28M over quarter ended Sept. 30 2001.
- Bankrupt US Airways.
DOWN as it lost US$335M in Q3 of 2002 despite severe cost cuts that have included thousands of layoffs.
- Target Logistics Inc.
DOWN with a Q3 deficit of US$500,000, despite a 21% jump in revenues, to US$26.1M.
Please click below for other sections:
Section A: Section: Trade, Financial & Inland News|
Section B: FF World Air News |
Section C: FF World Ocean News | Section
D: FF in Cyberspace |
Section E: The Forwarder/Broker World
Written from wire stories, the Associated
Press, Reuters, Hong Kong Shipping News Lloyds & other world sources.
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